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UNILATERAL DECISIONS BILATERAL LOSSES Since February 2019, India-Pakistan Relations Have Been Sliding Downhill

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UNILATERAL DECISIONS BILATERAL LOSSES Since February 2019, India-Pakistan Relations Have Been Sliding Downhill UNILATERAL DECISIONS BILATERAL LOSSES Since February 2019, India-Pakistan relations have been sliding downhill. Escalating tensions between India and German Statesman Otto Von Bismark once remarked "the road to Berlin lies through Vienna." BEMPOWERINGRI EGROWTHF I sincerely feel that the road between New Delhi and Islamabad lies through Punjab. For Punjabis, a Pakistan led their governments lot is at stake given their proximity to the shared border. Trade at Wagah-Attari had made this shared to take successive unilateral border a point of cooperation and interdependence. Highlighting the losses on ground because of decisions - impact trickling the suspension of trade, this book makes it evident how over time, trade has become crucial for the down to the trade communities survival of the border economies, revival of which could lead not just to prosperity but also lay the in both the countries. foundation for peaceful relations between India and Pakistan. International trade as a subject, Manpreet Singh Badal, Finance Minister, Punjab, India for policy making as well as research, is generally focused on, from a macro level. This book is an attempt to understand trade at a micro level in terms of the dependence of border India-Pakistan relations are said to be “accident prone”, and subject to sudden and unexpected swings economies on cross-border towards renewed engagement or reinforced estrangement. This study by Afaq and Nikita has drawn trade. This has been done by attention to some of the micro level impact of broader policy decisions, in this instance focussing on UNILATERAL DECISIONS assessing the socio-economic trade related restrictions imposed in February 2019. While the larger decisions have their own logic, the impact of trade suspension, local level impact on people and business certainly needs attention for mitigation, if people are to be through field research in Punjab, enthused to get involved again if and when the upswing phase returns. BILATERAL LOSSES and Jammu and Kashmir. As the Arun K Singh, Former Indian Ambassador to the United States, France and Israel trade communities, and the Afaq Hussain Nikita Singla citizens at large, stand by the decisions of the government, it is crucial to identify adequate measures that could be taken towards sustaining the people Having served in Jammu and Kashmir for decades, I have witnessed from the closest possible realm and the border economies, in how interwined politics and economics are for border economies. While this book focuses on two most the absence of cross-border politically fractious neighbors, I compliment the authors for successfully restricting their research on the Afaq Hussain Afaq trade. socio-economic ripples created in the border economies due to suspension of trade. The findings of the research make a compelling argument to start looking at trade from the lens of livelihoods. Mohammed Saqib Lt. Gen Satish Dua, a former Corps Commander in Kashmir, who retired as Chief of Integrated Defence Staff CEO, BRIEF Nikita Singla Nikita BEMPOWERINGRI EGROWTHF Bureau of Research on Industry and Economic Fundamentals (BRIEF) www.briefindia.com January 2020 UNILATERAL DECISIONS BILATERAL LOSSES Since February 2019, India-Pakistan relations have been sliding downhill. Escalating tensions between India and German Statesman Otto Von Bismark once remarked "the road to Berlin lies through Vienna." BEMPOWERINGRI EGROWTHF I sincerely feel that the road between New Delhi and Islamabad lies through Punjab. For Punjabis, a Pakistan led their governments lot is at stake given their proximity to the shared border. Trade at Wagah-Attari had made this shared to take successive unilateral border a point of cooperation and interdependence. Highlighting the losses on ground because of decisions - impact trickling the suspension of trade, this book makes it evident how over time, trade has become crucial for the down to the trade communities survival of the border economies, revival of which could lead not just to prosperity but also lay the in both the countries. UNILATERAL DECISIONS BILATERAL LOSSES foundation for peaceful relations between India and Pakistan. International trade as a subject, Assessing the impact of the face-off between India and Pakistan Manpreet Singh Badal, Finance Minister, Punjab, India for policy making as well as research, is generally focused on, in 2019, on border economies from a macro level. This book is an attempt to understand trade at a micro level in terms of the Afaq Hussain & Nikita Singla dependence of border India-Pakistan relations are said to be “accident prone”, and subject to sudden and unexpected swings economies on cross-border towards renewed engagement or reinforced estrangement. This study by Afaq and Nikita has drawn trade. This has been done by attention to some of the micro level impact of broader policy decisions, in this instance focussing on UNILATERAL DECISIONS assessing the socio-economic trade related restrictions imposed in February 2019. While the larger decisions have their own logic, the impact of trade suspension, local level impact on people and business certainly needs attention for mitigation, if people are to be through field research in Punjab, enthused to get involved again if and when the upswing phase returns. BILATERAL LOSSES and Jammu and Kashmir. As the Arun K Singh, Former Indian Ambassador to the United States, France and Israel trade communities, and the Afaq Hussain Nikita Singla citizens at large, stand by the decisions of the government, it is crucial to identify adequate measures that could be taken towards sustaining the people Having served in Jammu and Kashmir for decades, I have witnessed from the closest possible realm and the border economies, in how interwined politics and economics are for border economies. While this book focuses on two most the absence of cross-border politically fractious neighbors, I compliment the authors for successfully restricting their research on the Afaq Hussain Afaq trade. socio-economic ripples created in the border economies due to suspension of trade. The findings of the research make a compelling argument to start looking at trade from the lens of livelihoods. Mohammed Saqib Lt. Gen Satish Dua, a former Corps Commander in Kashmir, who retired as Chief of Integrated Defence Staff CEO, BRIEF Nikita Singla Nikita BEMPOWERINGRI EGROWTHF Bureau of Research on Industry and Economic Fundamentals (BRIEF) www.briefindia.com It all goes downhill: India-Pakistan 9 Acknowledgements 18-69 Fallout Post February 2019 Decision I: MFN Withdrawal and Duty Hike 19 Effects and the Affected 23 Case I: Dry date – the poor man’s dry fruit, gets dearer 30 Case II: Cement and Gypsum – drying Pakistani 38 supplies pushing India for ‘survival or revival’ About BRIEF’s ‘Partnering Case III: Rock Salt – the pink gold of Pakistan, 44 for Prosperity’ Program 11 with no substitutes in India and the Authors Decision II: Suspension of Cross-LoC Trade 51 A Decade of Cross-LoC Trade 56 Breaking Bridges and Losing Livelihoods at LoC 57 From Line of Control back to Line of Commerce 60 CONTENTS At a Glance - Unilateral Decisions Decision III: Airspace Closure 63 13 and Bilateral Losses Rising Turbulence: Impact on airlines and people 66 Surviving the unilateral decisions 70 and bilateral losses The Story of India-Pakistan 15 Trade: An Interplay between Politics and Economics Annexures 75-107 Annexure A. Media Series on Trade 76 Annexure B. Snakes and Ladders of India-Pakistan Relations 78 Annexure C. Brainstorming with Stakeholders 83 Annexure D. India-Pakistan Trade (Month-on-Month 84 Comparison between 2018 and 2019) Annexure E. Volumes Speak: LoC Trade 92 Annexure F. Struggling to Survive: Individuals 96 and Families in Amritsar Abbreviation Details ATS Air Traffic Service B2B Business-to-Business CBM Confidence Building Measure CHA Custom House Agent CWC Central Warehousing Corporation DRI Directorate of Revenue Intelligence EMI Equated Monthly Instalment EMS Express Mail Service GATT General Agreement on Tariffs and Trade GST Goods and Service Tax HS Code Harmonized System Code ICP Integrated Check Post IGST Integrated Goods and Service Tax IICCI Indian Importers Chambers of Commerce and Industry INR Indian Rupee J&K Jammu and Kashmir JKJCCI Jammu and Kashmir Joint Chamber of Commerce and Industry JNPT Jawaharlal Nehru Port Trust JWG Joint Working Group LoC Line of Control LWB Lorry Weighbridge MFN Most Favoured Nation MT Metric Tonnes NOTAM Notice to Airmen PITEX Punjab International Trade Exposition PKR Pakistani Rupee SAARC South Asian Association for Regional Cooperation SAFTA South Asian Free Trade Area SCO Shanghai Cooperation Organization SOP Standard Operating Procedure TATA Trade and Travel Authority TDAP Trade Development Authority of Pakistan TFC Trade Facilitation Center TFO Trade Facilitation Officer UAE United Arab Emirates UPU Universal Postal Union US/USA United States of America USD United States Dollar WTO World Trade Organisation Unilateral Decisions Bilateral Losses 7 Acknowledgements Post-February 2019, amid a deterioration in India-Pakistan relations, we traveled to Amritsar in the Indian state of Punjab, 28 kilometers from the border with Pakistan. The visit was aimed at gathering an on-the-ground understanding of how local stakeholders were affected by India’s withdrawal of the status of Most Favored Nation granted to Pakistan, and hike in customs duties. Seeing their plight, we felt the need to document the socio-economic impact of the latest India-Pakistan face-
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